The Singapore real estate capital market is poised for more activity, according to an October research report by Colliers. “As we navigate the tail end of 2024, the external environment shows signs of optimism with inflation receding and interest rate cuts, alongside a pick-up in economic momentum,” observes John Bin, Colliers’ director of capital markets and investment services for Singapore.
The brighter outlook will provide investors with the clarity and impetus to pursue compelling deals in the market, Bin adds. While the impact of the rate cut is not expected to translate into an immediate surge in activity, he expects the price expectation gap between buyers and sellers will gradually narrow in the coming months.
This, in turn, is expected to foster an uptick in transaction volumes as the market adjusts to the new economic environment. Colliers is predicting transaction volumes will grow in late 2024 and early 2025, as investors’ risk appetite rises with the expectation of further rate cuts.
Colliers’ sanguine outlook follows a rebound in investment volumes last quarter. Singapore real estate investment deals clocked in at $8.94 billion in 3Q2024, according to data compiled by the consultancy. This represents a 37.5% surge q-o-q and a 27.5% surge y-o-y.
The investment volume was bolstered by several significant Government Land Sale (GLS) tenders that amounted to $3.01 billion, or 34% of total investments. Investment volumes excluding the GLS deals also charted robust growth, climbing 77% q-o-q and 107% y-o-y.
The growth was supported by notable private commercial and industrial deals, including the purchase of a 50% stake in Ion Orchard by CapitaLand Integrated Commercial Trust from its sponsor for $1.85 billion and the sale of a $1.6 billion portfolio of industrial assets to Warburg Pincus and Lendlease.
Colliers’ report highlights that several investment deals in 3Q2024 were driven by institutional investors and REITs actively pursuing high-quality assets. “These transactions indicate a growing preference for investment in stabilised, high-performing assets rather than seeking value-add opportunities,” the report adds.
Institutional investors and REITs are expected to continue driving investment activity, propelled by more clarity on risk and returns as well as their overall confidence in the long-term value of prime Singaporean real estate. For the whole of 2024, Colliers is estimating investment sales to total between $22 billion and $24 billion, representing a 5% to 15% growth compared to last year.
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